Income Tax Appellate Tribunal - Mumbai
Skyline Mansions Private Limited, ... vs Income Tax Officer 15(3)(4), Mumbai on 6 November, 2018
Aayakr ApIlaIya AiQakrNa " SMC " nyaayapIz maM u b a[- mao .
IN THE INCOME TAX APPELLATE TRIBUNAL " SMC" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JUDICIAL MEMBER
Aayakr ApIla saM . / ITA No. 2009/Mum/2018
(inaQa- a rNa baYa- / Assessment Year 2009-10)
Skyline Mansions Pvt. Ltd. The Income Tax Officer,
101, Skyline, Behind W ard 15(3)(4),
Hiranandani Hospital, Near Room No. 15B, Ground
Vs.
Ayyappa Temple IIT Powai, Floor, Aayakar Bhavan,
Mumbai, Pin 400 076 M.K.Marg, Mumbai,
PIN-400 020
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. AAACB1997L
अपीलाथी की ओर े / Appellant by : Shri Subodh Ratnaparkhi, AR
प्रत्यथी की ओर े / Respondent by : Shri SK Bepar i, DR
ुनवाई की तारीख / Date of hearing: 29.10.2018
घोषणा की तारीख / Date of pronouncement : 06.11.2018
AadoSa / O R D E R
महावीर स हिं , न्याययक दस्य/
PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-24, Mumbai [in short CIT(A)], in appeal No. CIT(A)-24/ITO-15(3)(4)/IT-638/2016-17 vide dated 01.12.2017. The re-assessment was framed by the Income Tax Officer, ward-15(3)(4) Mumbai (in short 'ITO/ AO') for the A.Y. 2009-10 vide dated 13.12.2016 2 ITA n o .2 0 09 / Mum / 20 1 8 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter 'the Act').
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO reopening the assessment under section 147 r.w.s 148 of the Act, despite the fact that the assessee's case falls under the proviso to section 147 of the Act and original assessment was completed under section 143(3) of the Act after examining all the facts by the AO. For this assessee has raised the following grounds: -
"1. The Hon. CIT (A) erred in not appreciating that the re-opening of assessment u/s 147 of the I. Tax Act 1961, by issue of the notice a/s 148 dt. 29.03.2016, was inspite of the original assessment being completed u/s 143(3) and after passage of four years from the end of the relevant assessment year and therefore as per the first proviso to sec. 147, the re-opening of completed assessment when there was no failure on the part of the assessee to disclose fully and truly all material facts was bad in law and the assessment required to be struck down.
2. The Hon CIT (A) erred in upholding the re- opening of assessment u/s 147 of the 1. Tax Act 1961, by issue of the notice u/s 148 dt. 29.03.2016, not appreciating that the re-opening was on account of change of opinion and therefore the re-opening of assessment u/s 147 was bad-in-law and the assessment flowing therefrom was required to be struck down on that count.3
ITA n o .2 0 09 / Mum / 20 1 8
3. The Hon. CIT(A) erred in confirming the addition of Rs. 8,44,691/-. u/s 43B of the I.T. Act 1961. by holding that the appellant to have claimed double deduction of the same amount of MVAT in A.Y. 2008-09 and A.Y. 2009-10. which is not factually correct and therefore the addition was not justified."
3. The assessee is a private limited company engaged in the business of construction civil work and allied activities. The original return of income was filed on 26.09.2009 declaring income of ₹ 4,61,489/-. The AO issued notice under section 148 of the Act and commenced re-assessment proceedings under the belief that the income was escaped assessment. As per reasons recorded, the AO held a belief that the assessee has claimed double deduction under MVAT amount of ₹ 8,44,691/- in AY 2008-09 as well as AY 2009-10. For this the AO recorded the following reasons: -
"On perusal of the assessment records for AY 2009-10 and assessee's submissions, it is seen that assessee has claimed MVAI of Rs. 8,44,489/- in the computation of income for AY 2009-10 u/s. 438 as liability pre-existing on first day of financial year and paid during the year. The remark for the same is appearing in the audit report in Form 3CD at para 21(A)(a). However, on perusal of computation of income filed by the assessee for AY 2008-09 submitted vide letter dated 26.02.2014 it is found that there was no disallowance of unpaid MVAT liability of Rs. 8,44,489/- was made. For claim of any unpaid liability of preceding assessment year (2008-09) 4 ITA n o .2 0 09 / Mum / 20 1 8 in subsequent assessment year (2009-10) on payment basis u/s.43B, the same should have first been disallowed in AY 2008-09 then only it can he claimed in AY 2009-10. As per the audit report in Form 3CD, the assessee is following mercantile system' of account, therefore, the assessee should have disallowed unpaid MVAT liability in AY 208-09, and from the computation of income for AY 2008-09 it is found that the assessee has not made any such disallowance of MVAT under section 43B. By not disallowing this amount of MVAT in AY 2008-09 and again claiming the same amount in AY 2009-10 on payment basis under section 43B, the assessee has claimed double deduction of same amount of MVAT. This has resulted in underassessment of income by an amount of ₹ 8,44,489/- for AY 2009-10.
Further, this MVAT amount of ₹ 8,44,489/- includes MVAT of ₹ 5,22,688/- paid on sale of assets which is capital in nature. Any expenditure on purchases of asset and any receipt on sale of asset are capital in nature. It is only the expenses like depreciation/ amortization on use of assets for business operations are in the nature of revenue expenditure. Therefore, MVAT on sale of assets is also capital in nature and cannot be deducted against profit of business under section 43B."5
ITA n o .2 0 09 / Mum / 20 1 8
4. The AO completed the re-assessment by making addition of the claim of double deduction of MVAT amounting to ₹ 8,44,691/-. The CIT(A) also confirmed the action of the AO. Before CIT(A) the assessee has challenged the issue of reopening of completed assessment but CIT(A) confirmed the reopening. Aggrieved, assessee came in second appeal before Tribunal.
5. I have heard the rival contentions and gone through the facts and circumstances of the case. Before me, the learned counsel for the assessee stated that this assumption promoted the AO to issue notice under section 148 of the Act and commence re-assessment proceedings. The order under appeal is the result of such re-assessment proceedings. The claim of the assessee is that the notice under section 148 of the Act is wrongly issued and the same being not merited under law, the assessment flowing therefrom is also invalid and bad-in-law. It is submitted that the AO has failed to appreciate that the original assessment in this case was completed under section 143(3) of the Act on 28.01.2011 by the DCIT(OSD)-II, Central Range-7, Mumbai. As per the reason recorded, the re-opening of the present assessment is on the basis of the appellants own assessment for AY 2009-10. I have gone through the reasons recorded and noticed that the first para of the reasons recorded, which starts with "on perusal of assessment records for AY 2009-10 and assessee's submissions, it is seen that......". The entire reason recorded establish that the re-opening is on the basis of revisiting the original assessment recorded for AY 2009-10. It is settled position of law that reason to believe cannot be the outcome of a change of opinion. When the entire facts relating to a particular issue are on the record of the AO at the time of original assessment, the same facts cannot be the basis of reopening the assessment or change of opinion. In the present case, the AO is candid enough to admit that the re-opening is on the basis of documents pertaining to disputed expenditure of ₹ 8,44,691/- available on 6 ITA n o .2 0 09 / Mum / 20 1 8 his record as part of original asst. proceeding. The same sets of facts have been made the basis of re-opening of present assessment. The reasons recorded in the present case do not attribute any failure or omission to the assessee to fully and truly disclose all material facts. In such circumstances, notice under section 148 of the Act issued after four years from the end of the relevant asst. year with original assessment being completed under section 143(3) and there is no omission or failure being attributed to the assessee, results in the notice u/s 148 being bad- in-law and assessment, flowing therefrom liable to be quashed.
6. Even on merits, I find from the facts of the case that the AO has made addition of Rs. 8,44,691/- u/s 43B of the Act 1961 in respect of MVAT amount holding that the assessee company had unjustifiably claimed double deduction of Rs.8,44,691/- in A.Y. 2008-09 as well as A.Y. 2009-10. I find from the facts of the case that the assessee company has not claimed any deduction for expenditure in respect of MVAT amount of Rs.8,4,691/- for the AY 2008-09. The MVAT payment was made on 29.09.2008. The MVAT payment is made in previous year relevant to A.Y. 2009-10 and deduction for the same was claimed by assessee on payment basis in A.Y. 2009-10. The deduction for MVAT is claimed only in A.Y.2009-10 on payment basis and therefore disallowance of the said deduction on the presumption that the assessee has claimed the same deduction for two asst. years is factually incorrect. I have gone through the copy of audited financial statements and computation of income for AY. 2008-09 which are enclosed at pg nos. 52 to 86 of the assessee's paper book. Even, the photocopies of challans for payment of' Rs.8,44,691/- (Rs. 5,22,688 + Rs. 3,22,003) are enclosed at pg nos. 87 & 88 of the assessee's paper book. Accordingly, I am of the view that disallowance of MVAT amount in AY 2009-10 is not justified as the assessee had not claimed any deduction of MVAT amount in AY 2008-09 and hence there is no case of double deduction of the same amount. Therefore, disallowance 7 ITA n o .2 0 09 / Mum / 20 1 8 under section 43B of the Act is not warranted. Hence, the appeal of assessee on jurisdiction as well as on merits is allowed.
7. In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 06-11-2018.
Aado S a kI Gaao Y aNaa Ku l ao mao idnaM k 06-11-2018 kI ga[- .
Sd/-
(महावीर स ह
िं /MAHAVIR SINGH)
(न्याययक दस्य/ JUDICIAL MEMBER)
Mumbai, Dated: 06 -11-2018
Sudip Sarkar /Sr.PS
Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai BY ORDER,
6. Guard file.
//True Copy//
Assistant Registrar
ITAT, MUMBAI